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Providing more food for thought

Updated: 2011-08-29 09:42

By Ding Qingfen (China Daily)

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The framework of the WTO has provided China with the funds to allow manufacturers and exporters to promote their brands through exhibitions.

Foreign investors are also eager to become involved in the nation's agricultural industry, actively partnering local players and providing investment for joint ventures.

In 2010, six investors, including Atlantis Investment Management Ltd, Blackstone Group, Capital International Funds and Warburg Pincus, International LLC, each invested $100 million for a combined 30 percent stake in the China Shouguang Agricultural Product Logistic Park.

Situated in Shandong province, Shouguang is China's largest center for vegetable transactions and logistics, and it was listed in Hong Kong earlier this year.

According to the Ministry of Commerce, between January and May, the foreign direct investment flowing into China's agricultural sector grew by 28.16 percent to $814 million, outpacing that of the manufacturing sector (20.63 percent) and the service industry (27.68 percent). By working with foreign partners, Chinese companies are able to obtain capital and improve their management and technology. Meanwhile, some key manufacturing and export bases have come into existence, including a vegetable base in Shandong, and an aquatic goods facility in Zhejiang. Meanwhile, a base for tomato exports has opened in the Xinjiang Uygur autonomous region and an apple and apple juice base in Shaanxi province.

Quality is key

In the wake of a series of scandals, including cucumbers contaminated with E coli in Germany and food polluted with nuclear radiation following the March 11 earthquake and tsunami in Japan, people have become much more aware of the problem of food safety.

However, in China, the food for export has been generally proved safe.

"China's agro-exports are fairly good, with 99 percent of the food for export meeting all the safety qualifications," said Zhong Shan, vice-minister of commerce.

As part of the country's efforts to transform its economic development mode and adjust the economic growth structure, the ministry has launched initiatives to improve the quality of exports and add value , and agricultural goods play a major role in the program.

"We have to be on high alert about the quality of agro-goods, as that issue concerns the health of people both at home and abroad," said Zhong.

Shandong province has set up 24 experimental areas for the export of agro-goods in selected cities, including Weihai and Anqiu. The provincial government has invested 130 million yuan to build quality-testing centers and a complete producer-tracking system to ensure the safety of exports.

Shandong's agricultural producers mainly export their goods to Japan, a nation that has the strictest rules on agro-imports worldwide.

Since 2009, the Japan Refrigeration and Air Conditioning Industry Association has sent eight delegations to Shandong to check the quality of the goods produced there. The teams praised the quality-guarantee mechanism. "Shandong has set a good example in ensuring the quality of agro-exports. We must promote its successful methods in other regions and businesses," said Zhong.

As a top 10 food manufacturer and exporter and the nation's largest exporter of the famous sauce brand, Pearl River Bridge, Guangzhou Food Import and Export Group Co Ltd has registered double-digit growth in overseas sales annually since 2008.

In 2010, the company's exports were worth $230 million and the prospects look good, said Wu Wei, Guangzhou Food's deputy general manager.

"The confidence comes from our quality and efforts in improving the brand," he said.

In 2000, the company established an R&D center, which accounts for 5 percent of its annual sales revenue. The center mainly studies methods of producing high-quality, value-added sauces at a comparatively low cost.

As a means of further promoting the brand at home and abroad, the company is preparing for a public listing on the Shanghai Stock Exchange later this year, Wu said.

In common with many other labor-intensive sectors such as footwear, luggage and clothing, China's agricultural industry has few strong global brands and the majority of the exporters are Original Equipment Manufacturers (OEM) - meaning that their products are purchased and retailed overseas under the brand names of the purchasing companies - despite the fact that some of them have robust sales.

Analysts said establishing a brand will be a hard nut for the Chinese agro-industry to crack, if companies expect to expand rapidly.

Yu Jianyang, director and general manager of Rongcheng Taixiang Food Products Co Ltd, agreed.

As a Chinese leading producer and exporter of pork products, including pork cluster, pork cakes and pork balls, Taixiang's goods are sold to Japan, South Korea, the US and in the EU.

In 2010, the company's overseas sales reached $100 million and are set to hit $130 million this year, Yu forecast.

"We have strict requirements on quality. We regard quality as the soul of our business," said Yu.

"But the real pity is that Taixiang has been an OEM. We are planning to create our own brand for overseas markets, but it really takes time," Yu said.

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